5 Best Wind Power and Solar Stocks To Buy

3. NextEra Energy Inc (NYSE:NEE)

Number of Hedge Fund Investors: 65

NextEra Energy Inc (NYSE:NEE) produces electricity through wind, solar, nuclear, natural gas, and other clean energy. The stock is making waves after it recently upped its dividend by 10.2%. With close to three decades of consistent dividend increases and a healthy yield of over 3.5%, it is one of the top favorite wind and solar stocks among hedge funds.

A total of 65 hedge funds tracked by Insider Monkey had stakes in NextEra Energy Inc (NYSE:NEE) as of the end of the fourth quarter of 2023.

ClearBridge All Cap Value Strategy made the following comment about NextEra Energy, Inc. (NYSE:NEE) in its Q3 2023 investor letter:

“Many businesses are threatened by a higher cost of capital, but one where reality has set in, and which also touches many other growth areas of the market, is the utility company NextEra Energy, Inc. (NYSE:NEE). Over the past few years, the company developed into a growth darling thanks to its strong track record in renewable energy development and tailwinds from the global energy transition and incentives in the Inflation Reduction Act. The problem for NextEra, and the transition broadly, is that this transformation is immensely capital intensive and many renewables projects offer lower returns on that capital. This requires high capital expenditures – often resulting in negative free cash flow – to meet the growth and financing needs of companies like NextEra. To help, the company leaned on financial engineering by using a publicly traded limited partnership called NextEra Energy Partners, providing further capacity for its parent to continue its development plans. NEP used layers of its own financial engineering to fund its own negative free cash flow and a large, growing dividend yield that we believe it could not sustain organically. Ultimately, the higher cost of debt from rising rates led NEP to lower its own growth ambitions, driving concerns about whether NextEra can execute on its extensive backlog. As a result, the stock has declined by approximately 30% year to date.”